Look Ahead 2013

Where Social Media Is Headed This Year

Expect More Facebook Ads and Gifts, and Reality to Set in for Startups

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Number 1

Facebook tests users' tolerance for more ads

Facebook is poised to have a big fourth quarter, partly because of its decision to stuff users' mobile news feeds with ads. The company has always been vocal about user experience being paramount, but that philosophy is being tested by the pressures of meeting expectations as a public company. While that doesn't mean you should expect to see home-page takeovers, it does mean that advertising is getting more intrusive on the platform. In fact, Facebook is planning to introduce its most noticeable ad format yet: video ads, which will be introduced into news feeds in the first half of 2013. Facebook has introduced new formats for years without driving users away but its pace of its experimentation with ad products is quickening. This year, as it looks to scale revenue, Facebook will really test the limits of user tolerance for commercial messages. If history is a guide, a vocal minority will cry foul while user engagement scales up and to the right.

Reality sets in for social-marketing and analytics startups

Consolidation was the story for a generation of social-marketing startups that came on the scene over the past few years, with Salesforce's $689 million acquisition of Buddy Media as the high-water mark. With major buyers such as Oracle (which gobbled up Involver and Vitrue) and Google (which bought Wildfire) presumably no longer in the market and funding drying up, startups will have to make it on their own.

Facebook's crop of preferred marketing developers may look to do deals among each other. And it's quite possible that Facebook and Twitter themselves will make an "acqhire" or two of smaller social ads and analytics companies to siphon off premier talent.

Facebook pushes users toward 'gifts'

At the start of holiday retail season, Facebook crowed about its social-gifting platform, which had attracted retailers such as Fab.com, Brookstone and Dean & Deluca. It followed up with a big marketing push on Facebook pages, urging users to "Send a last-minute gift." Whether the message drove users to buy their friends bottles of wine and Magnolia Bakery cupcakes remains to be seen, but one thing is for sure: Facebook won't give up on gifts. The social net is very interested in diversifying its business beyond advertising, and the fastest way to do that is to get more users buying stuff through Facebook. Side bonus: Transactions give Facebook a richer dataset to target advertising.

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